KLM-Air France Crisis: French and Dutch Government Hold their Breath

KLM, The Netherlands’ biggest airline group, is on the verge of losing its French sister company Air France, as the French airline goes through a major organizational crisis. Together, the French and Dutch national, with its headquarters based in Paris, form the world’s third-biggest cargo airline. However, as French employees have put down their work multiple times in the past few months, trust in the French board and its CEO has been lost.

In September 2003, Air France and KLM, after months of negotiations and paperwork, finally decided to join forces, suddenly turning the newly formed alliance into one of the biggest airlines in the world. The deal, which seemed beneficial for both parties at the time, offered large financial and logistical advantages for both airlines. Since then, the unification has however started to also show its downsides, as the Dutch specifically seem to be losing more trust in the French, and the French are having more trouble collaborating with their seemingly purely profit-driven Dutch partners.

Now, almost fifteen years into the relationship, the partnership is at an all-time low. The French unions representing both pilots, cabin crew and all staff on the ground are demanding an overall 6% general wage increase. As this demand had not been met by the French board, the French workers first started going on strike in late February of this year and have continued to show their discomfort with the current situation by putting down their work sporadically since then. Multiple times, more than thirty percent of all passenger flights had to be canceled due to these strikes, which have cost the airline group an estimated 75 million euros in the first quarter of 2018 alone, increasing their total loss in the first quarter to a devastating 118 million, as was reported by Air France and KLM.

Since then, Air France has tried to come to a compromise with their employees, proposing multiple wage increases, which were all rejected by the unions, as none of them met their strict demand of at least a 5,1% wage increase. Finally, the situation escalated the 4th of May, when the board of Air France called for a general vote amongst the employees about the general working conditions at the company. CEO Jean-Marc Janaillac put his own career at stake by announcing that he would step down if more than half of his employees would not agree to the newly improved working conditions. This decision by the CEO was a bold one, as was even mentioned by France’s Prime Minister Édouard Philippe, who called it a ‘courageous move’. However, Philippe also condemned the decision, stressing the fact that the CEO stepping down is not the best way to face the problems that the airline is dealing with, after having stated earlier that Air France would enter a very turbulent time were Janaillac to step down as CEO.

Finally, after the vote ruled against the fate of Janaillac, he chose to step down from his position as CEO within the same week. Since then, no new CEO has been announced, nor have there been many rumors regarding possible candidates. Because of this, the situation of the French-Dutch multinational remains dangerously fickle, as the French workforce is still not pleased with their working conditions and wage. In addition to this, the French side of the partnership has been receiving even more criticism from both its Dutch partners, as well as the French government, as both the Secretary of Treasure and the Secretary of Transport have shown distrust towards Air France. For KLM and The Netherlands, it is essential that this crisis is resolved as soon as possible, as the combined efforts of Air France, KLM, and all its daughter companies make up for more than thirty percent of all flights at Schiphol airport, one of The Netherlands’ largest forms of income.